Correlation Between Nebraska Municipal and Prudential Emerging
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and Prudential Emerging at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nebraska Municipal and Prudential Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebraska Municipal Fund and Prudential Emerging Markets, you can compare the effects of market volatilities on Nebraska Municipal and Prudential Emerging and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nebraska Municipal with a short position of Prudential Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Prudential Emerging.
Diversification Opportunities for Nebraska Municipal and Prudential Emerging
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nebraska and Prudential is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Prudential Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Emerging and Nebraska Municipal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nebraska Municipal Fund are associated (or correlated) with Prudential Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Emerging has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and Prudential Emerging go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Prudential Emerging
Assuming the 90 days horizon Nebraska Municipal is expected to generate 2.09 times less return on investment than Prudential Emerging. But when comparing it to its historical volatility, Nebraska Municipal Fund is 1.9 times less risky than Prudential Emerging. It trades about 0.03 of its potential returns per unit of risk. Prudential Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 430.00 in Prudential Emerging Markets on September 1, 2024 and sell it today you would earn a total of 26.00 from holding Prudential Emerging Markets or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. Prudential Emerging Markets
Performance |
| Timeline |
| Nebraska Municipal |
| Prudential Emerging |
Nebraska Municipal and Prudential Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Prudential Emerging
The main advantage of trading using opposite Nebraska Municipal and Prudential Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, Prudential Emerging can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Prudential Emerging will offset losses from the drop in Prudential Emerging's long position.| Nebraska Municipal vs. Lord Abbett Convertible | Nebraska Municipal vs. Harbor Vertible Securities | Nebraska Municipal vs. Virtus Convertible | Nebraska Municipal vs. Rationalpier 88 Convertible |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |